Going into the second half of 2013 (2H13), analysts are still hedging growth bets with the continued macroeconomic jitters that have yet to lift. That being said, mobility forecasts and opportunities for new devices touting the latest chips showcased during 1H13 are quite bullish. Finally, we see that there is hope for continued growth visibility despite the stubbornly bearish macroeconomic situations.

Data support continued growth

The latest World Semiconductor Trade Statistics (WSTS) data support a 2013 recovery for the global semiconductor market at a 2.1% year-over-year (YoY) increase over 2012 sales, with further growth of 5.1% YoY for 2014.

Among key variables supporting the positive growth forecasts are the market expansions for mobility which range from regional growth due to new opportunities in emerging markets, device expansions due to new convertible PC-tablets and "phablets" that increase functionality and user experiences, and wider pricing tiers extending dedicated designs for mid- to lower-priced device ranges. Furthermore, there is an industry diversification that has increased the penetration rate of electronics and semiconductor components for industrial, medical, and automotive markets.

Analysts have been carefully watching both Days of Inventory (DOI) and order rates. Although there is still concern for the PC sector based on inventory and reduced sales for PC end market, the industry forecasts are balanced by the continued strength of tablets and smartphones. Despite these current hesitations in the market, such as noted in J.P. Morgan's wrap-up of their recent Technology Conference, Semiconductors – Tech Conference Wrap 5-20-13, SEMIforesees long-term growth for the US semiconductor manufacturing as well as globally. Data supporting these positive forecasts are particularly rooted in equipment and material spending which SEMIpredicts will increase more robustly in 2H13:

The equipment spending increase in the second half is attributed to growing semiconductor demand and improving average selling price for chips. 2014 is expected to have 23 to 27 percent growth of $41 billion year-over-year (YoY), which would be an all-time record. […]

2014 is expected to be a growth year for fab equipment spending for almost all major product segments. For example, spending for Memory is expected to increase over 40 percent, but spending amounts are not expected to exceed what was seen in 2010 or 2011. MPU is expected to increase by over 50 percent, driven mainly by the ramp of 14nm facilities. The foundry sector is still expected to have the highest spending for fab equipment on 2014, but growth rate may slow to about 15 percent.

BRIC mobility expansion revival

We've not heard much about growth in the emerging markets, especially Brazil, Russia, India, and China, known as the BRIC nations. The subdued macroeconomic conditions depleted the wind for their sails as well, but these forecasts are also coming around quickly. New research from IDCreveals the significant growth opportunity for smart wireless devices (SWDs) in emerging markets:

[g]lobal shipments of smart connected devices (PCs, tablets, and smartphones) are expected to surpass 1.7 billion units by 2014 with roughly 1 billion units delivered to the emerging markets. Within the emerging markets, the BRIC countries – China, India, Brazil, and Russia – are expected to generate shipments of 662 million units with a shipment value of more than [US] $206 billion. More than 650 million units are forecast to be shipped to developed markets with the United Sates, UK, and Japan capturing more than 400 million units with a shipment value of [US] $204 billion.

With the BRIC countries expected to surpass the total shipments to developed markets by 2014, it is clear that demand for smart connected devices is quickly shifting from developed to emerging markets. The emerging markets are expected to grow at a compound annual growth rate (CAGR) of 17% over the 2012-2017 forecast period, compared to the 7% CAGR expected in developed markets.

Clearly, the newest set of components and end-devices targeted for mid- to lower-range pricing tiers is likely to pay off handsomely (see our earlier discussions of CES, MWC, and Computex for more about these unveilings).

We'll explore in detail the mid-market strategic focus for components and end-devices, emerging market forecasts, and the umbrella of mobility drivers in the upcoming Smith MarketWatch Quarterly out later this month (free subscription). The data reveal important shifts in the industry and supply chain that focus around key drivers affecting a critical set of components and markets.